New data reveals that the mortgage sector is lending more than at any time since before the global financial crisis of 2008...

New figures have revealed that mortgage lending in the UK has returned to levels last seen before the global financial crisis. Banks lent more money through mortgages in October than at any point since the summer of 2008 as low interest rates tempted thousands of borrowers into the market.

Consumer confidence and low rates driven by strong competition between lenders have seen gross lending rise by over a quarter in the last year.

The latest data from the British Bankers' Association (BBA) has revealed that gross mortgage lending reached £12.9bn in October, the highest figure since August 2008. This represents a rise in lending of 26% since October 2014.

There were 45,437 house purchase mortgage approvals in October, 21% more than in the corresponding month last year. Remortgaging has also increased, with 24,275 approvals in October, up 34% on the same month in 2014. The BBA said that the average value of mortgages approved for house purchases was £175,600, while remortgagers typically borrowed £172,800.

Richard Woolhouse, chief economist at the BBA, says: “These statistics show that housing market activity remained strong in October, with gross mortgage borrowing 26% higher than a year ago and at its highest level for seven years.

“Consumers remain confident and their incomes are growing. Mortgage rates are at multi-year lows and people are snapping up the competitive deals being offered by banks.”

Strong competition driving down the cost of mortgages

Many experts have attributed the rise in mortgage lending to the range of cut-price deals currently available in the market. A price war among lenders in recent months has driven down the cost of borrowing and borrowers have been keen to snap up some of the cheapest deals on record.

The Guardian reports that borrowers looking to fix their mortgage for five years can pay as little as 2.14%, while those fixing for two years can get a rate as low as 1.15%.

Mortgage expert Mark Harris believes that lenders are offering low rates in order to reach year-end lending targets. He told the Financial Times: "While the Bank of England has issued concerns about the level of household debt, we are far from experiencing a debt-fuelled boom" adding that although mortgage approvals are rising, they are far from “racing away”.

Keith Osborne, editor of whathouse.com, adds: "While many borrowers are taking advantage of low-cost deals, there are still millions of people who are finding it hard to get the mortgage they need because of the tough affordability checks that lenders have to undertake."